Rite Aid to pay $20.9M in overtime lawsuit settlement

Rite Aid Corp. will pay up to $20.9 million to settle allegations it misclassified assistant store managers and co-managers as exempt employees in order to avoid paying them overtime, the midstate-based pharmacy chain said Monday.

The settlement resolves 15 lawsuits and allegations dating to 2002. It covers more than 6,000 current and former employees in Pennsylvania and 39 other states.

According to the settlement's preamble, it is the product of a seven-month negotiation process. The agreement is subject to final court approval; federal Judge John Jones of the Middle District of Pennsylvania has set a hearing for Oct. 24.

By settling, Rite Aid said, it will "avoid further distraction from litigation that has been ongoing for the past four years." The company denies any wrongdoing.

The company eliminated the job categories in question when it revised store operations in 2009 and 2010, spokeswoman Susan Henderson said this afternoon in an email.

The plaintiffs' lead counsel praised the settlement.

"This is an excellent result for the present and former Rite Aid assistant managers and co-managers," attorney Seth Lesser of Rye Brook, N.Y.-based law firm Klafter Olsen & Lesser said in a statement. "The settlement will provide a definite and sure recovery long before any possible payment could be achieved through continued litigation."

Attorneys' fees are to be paid out of the settlement and may not exceed one-third of the $20.9 million.

Rite Aid, based in East Pennsboro Township, Cumberland County, is the nation's third-largest drugstore chain. Its shares trade on the New York Stock Exchange under the ticker symbol RAD.

Editor's note: This story has been modified from a previous version to correct the day of the week the announcement was made.